Japan Needs More Brawling Billionaires

Oct. 11 (Bloomberg) -- Japan is being treated to a juicy
spectacle as two of its richest and most innovative
entrepreneurs brawl in public over Internet market share and
visions for the future. But what’s most important about the
fight between Masayoshi Son and Hiroshi Mikitani is the example
it’s setting.

The two men have much in common. They are self-made
billionaires who founded game-changing technology companies --
Son with mobile-phone carrier SoftBank Corp., Mikitani with e-commerce giant Rakuten Inc. Each is his company’s largest
shareholder, fully fluent in English (a rarity in corporate
Japan) and U.S.-educated (Son at the University of California at
Berkeley; Mikitani at Harvard University). Both are married with
two kids. Both make splashy investments in overseas Internet
companies (Son in Alibaba Group Holding Ltd.; Mikitani in
Pinterest Inc.). Both are sports nuts who own baseball teams.

Son and Mikitani are also the faces of New Japan and
unapologetic critics of Japan Inc.’s clubby, insular ways. They
oppose nuclear power, a stance that puts them in direct conflict
with the ruling Liberal Democratic Party and Japan’s powerful
business lobby, Nippon Keidanren.

Above all, both share a passion for change and are the kind
of creature Japan needs more of as it tries to end a 20-year
funk. As they mix it up and make headlines around the globe,
they are adding some much-needed energy to Prime Minister Shinzo
Abe’s revival plans.

Lower Fees

Their latest tiff was instigated by Son, who is also
chairman of Yahoo Japan Corp. Son eliminated fees that the
search and shopping business had charged for online stores, a
direct challenge to Rakuten, Japan’s largest Internet shopping
mall. Rakuten’s model is based on charging businesses such fees
to operate shops on its site; by contrast, Yahoo Japan is a
portal and retail site that gets more than half its revenue from
advertising. Son figures lower fees will increase market share
and, eventually, ad sales.

Japan’s conservative business culture is somewhat aghast by
the budding price war: At one point, investors had wiped out as
much as $4.3 billion in both companies’ market values. Japan
Inc. has always encouraged carving up territory and staying out
of each other’s way. When rifts emerge, they’re handled over
whiskey and secret handshakes. How could Japan’s second- and
third-wealthiest men scuffle publicly like this? The indignity!

But Son and Mikitani are showing young, would-be
entrepreneurs that they can be more than docile, corporate
drones in dark suits mindlessly working their way toward
retirement. They are injecting competitive juices into an
economy that’s known all too little. They are, by example,
inspiring contemporaries to take risks, think globally and act
in the best interests of shareholders.

Theirs isn’t the perfect rivalry. A better one would pit
New Japan against the old guard. The last time that happened in
a widely publicized way didn’t end well for Internet guru
Takafumi Horie of Livedoor Co. In 2007, the 35-year-old Horie,
an outsider in corporate Japan, was locked up for accounting
irregularities, though his real crime seemed to be speaking out
against Japan Inc.’s blinkered ways.

Contrast his fate with that of Tsuyoshi Kikukawa, on whose
watch a $1.7 billion fraud at Olympus Corp. resulted in an 80
percent plunge in market value and global shame. The scrappy,
brash, T-shirt-wearing Horie went to prison for engaging in
practices that are widely employed in Japan accounting circles.
And Kikukawa, as Japan Inc. as an executive can be? He got a
suspended sentence.

New Guard

Still, there’s great value in having the two faces of
Japan’s new guard locking horns. More fights like this would
have executives looking over their shoulders, unable to hide
behind the cross-shareholding arrangements that kill
competition, the poison pills that breed complacency and the
insularity that stifles rapid growth.

Does “Abenomics” deserve some credit for this Son-Mikitani spat? I would argue the opposite. Sure, their
businesses are benefiting from the first two phases of Abe’s
revival plan: monetary and fiscal pump-priming. But these
innovators are taking phase three -- shaking up Japan’s staid
business culture -- into their own hands. Abe would be wise to
respond to their impatience by getting on with deregulating the
economy.

Last month in New York, Abe cited the example of Gordon
Gekko, villain of Oliver Stone’s 1987 film “Wall Street,” as
part of his Japan-is-back marketing blitz. Yet reclaiming the
vibrancy Japan once enjoyed means balancing the nation’s
preference for stability against Gekko’s “greed is good”
mantra. Japan’s economy is still focused too much on job
protection from the top down and not enough on job creation from
the ground up.

For all their differences, Mikitani and Son personify the
kind of visionary and unconventional leadership Abe hopes to
inspire. Mikitani wants to be the world’s next Jeff Bezos, the
Amazon.com founder who is now rescuing the Washington Post. Son,
meanwhile, is expanding globally with his acquisition of U.S.
wireless provider Sprint Corp. As these two titans face off and
roil the claustrophobic confines of Japanese society and
business, they’re giving Abenomics just the boost it needs.